Illinois punishes Wells Fargo over fake accounts scandal

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WASHINGTON: The State of Illinois on Monday (Friday in Manila) announced it was suspending as much as $30 billion in investment activity with the embattled California lender Wells Fargo over the bank’s fraudulent sales practices.

It was the second state in a week to suspend some ties with the bank, after Californian authorities announced Wednesday they were halting certain business relations with Wells Fargo for a year, including lucrative municipal bond underwriting.

Wells Fargo earlier this month publicly admitted that employees opened millions of accounts in customers’ names without their knowledge in an effort to meet demanding sales targets.

The bank settled complaints over the accounts with US regulators and the City of Los Angeles for $185 million.
Illinois said it will suspend investment in Wells Fargo debt securities and any use of the bank as a broker/dealer.


“We have a choice where we invest taxpayer money. We will not reward companies that irresponsibly open new bank accounts and improperly repossess vehicles of members of our armed forces,” Illinois State Treasurer Michael Frerichs said in a statement.

The $30 billion figure represents the value of the share of the state investment portfolio passing through Wells Fargo over a year, the statement said.

In heated hearings on Capitol Hill, US lawmakers have called for the resignation of the bank’s chairman and CEO, John Stumpf, and denounced the bank for its perceived failure to hold senior management accountable.

The bank’s share price has lost more than 12 percent since the scandal broke earlier this month and closed 1 percent lower on Monday at $43.83.

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